Capital markets are places where short (negotiable debt securities), medium and long-term securities (bonds, shares) are exchanged for currency.
The WAEMU capital market is composed of the money market and the financial market.
The money market can be defined as the short- and medium-term capital market. It is an over-the-counter, non-localized market. Established since July 1, 1975 and supervised by the Central Bank of West African States, the WAEMU money market was renovated in October 1993. It comprises two compartments:
- The interbank market: a meeting place where supply and demand for bank liquidity meet;
- The market for negotiable debt securities (commercial paper, negotiable certificates of deposit, etc.) open to all economic agents.
It should be noted that the market for government securities by auction is linked to the market for negotiable debt securities. This market is exclusively dedicated to financing WAEMU member states.
The Financial Market, created on July 3, 1996, can be divided into two distinct parts: the Primary Market and the Secondary Market.
The Primary Market is based on the issuance of new shares and bonds, while the Secondary Financial Market is where securities already issued are traded.
It is this Secondary Market which is organized by the Regional Stock Exchange (BRVM) with the Central Custodian/Settlement Bank (DC/BR) which guarantees the successful completion of operations.
The highest financial market authority is the Conseil Régional de l'Epargne Publique et des Marchés Financiers (CREPMF), which has powers of authorization, control and sanction.
Through this link between the search for and presentation of the funds required for the growth dynamics of any economy, the capital market performs several functions that enable it to :
- ensure the financing of WAEMU economies;
- the best management of state deficits;
- to create wealth for savers;
- facilitate the capital operations of companies;
- to serve as a reference for the valorization of companies;
- improve access to financing for businesses.
In our upcoming publications we will discuss the financial products available on WAEMU capital markets.